‘RIAA-written’ Net radio bill served to Senate

The United States Senate today will consider the bill to "save Internet radio", HR.5469. It's a bill which does nothing for education, religious, non-profit or hobbyist radio. Many webcasters were stunned when the bill morphed from a two paragraph "stay of execution" into an alternative royalty scheme after a splinter group decided to negotiate a closed-door deal with the Recording Industry Association of America, the RIAA.

After lobbying Congress, many small webcasters have voiced their anger and disappointment at the turn of events - as we reported here. But the breakaway VoW (Voice of Webcasters), which signed a joint press release with the RIAA last week, insists this was the best deal possible. You'll hear from both sides, and can make your own minds up.

One date adds urgency to the proceedings. On October 20 the punitive CARP rates, performance royalties set by the Library of Congress, come into effect. But outside the VoW cabal, few webcasters seem to think that this is the end of the world. Private legal claims that could derail the RIAA's efforts to dictate terms to the infant industry are due to be heard in the next six months. And on the shelf, and gathering dust is Jay Inslee's Internet Radio Fairness Act which is likely to make a reappearance in the next Congressional session.

Or maybe not: as Lightningcast's Ethan Evans reminded us. Congress has a very short attention span and if it thinks it's "fixed" a problem, it's unlikely to return to the subject. Evans is worth listening to: he's not a webcaster , but a CTO of a company that creates adspace on streamed media, so he has a vested in creating a commercial market for advertisers. Evans personally - not speaking for Lightningcast - thinks the rushed and revised HR.5469 is a bad bill.

Laughable, Pure Fantasy, Total Disregard for the Facts

VoW ringleader Mike Roe wrote to us to dispute our article. He called Ann Gabriel's statement "laughable", explaining:

"We began a negotiation in May to obtain relief for small business owners - not hobbyist, not non-commercial entities, no party other than small businesses. There is nothing odd or shady about this," he told us.

Roe said the accusations were "pure fantasy" and showed a "total disregard for the facts", continuing:

"It would appear that some are upset that Hr5469 morphed from a stay to a deal. I can honestly say that all of us are as surprised by that development as the rest of the community. We had no hand in that development whatsoever. That was a decision made by the House Judiciary Staff - not us."

It's certainly true, the conflicting accounts agree, that grandstanding by the Chairman of the House Judiciary committee James Sensenbrenner pressured the two sides into a deal. And there's no disputing that Democrat support for the original six-month cooling off period proposed by the first HR.5469 flagged when the AFL-CIO threw its weight against the bill. But what were the negotiators doing in a room with the RIAA in the first place, ask disappointed webcasters, and secondly, why didn't they walk away?

As one of the VoW present, who has subsequently expressed reservations about the deal, Kevin Shively of Beethoven.com, told us yesterday:

"People who are under pressure grasp at what they need to survive."

Several webcasters dispute this version of events.

"I'm all for self-preservation, but not self-preservation at the expense of everyone else," webcaster Scott Jamar told us.

"Why, exactly, was it a choice between HR 5469 or nothing?" asks Detroit Industrial Underground 'caster Brian Hurley. "The entire webcasting community mobilized to support a bill that (so we were told) benefited the entire community. The next thing we know, its been rewritten to only benefit the largest webcasters. Now we hobbyists are being told how great the CARP rates really are for us."

Robert 'Rabbett' Abbett, who runs the popular Hawaiian station Internet Radio Hawai'i says the revised bill that emerged from the cabal's negotiations with the RIAA was skewed in the oligopolist's favor:

"It's a bunch of crock," he told us. "We wanted a six-month stay, but this blossomed into a twenty-eight page hog that was written by the RIAA."

"Rather than have the RIAA write the negotiations, we need some mediator or arbitrator to settle this out in the open."

Rabbett, a radio veteran with 1500 listeners for his station and who has been prominently featured in media coverage of the industry, says he's sympathetic to the negotiators plight.

"I don't think anyone consciously went in with the intention they were going to screw any other webcaster. It was more like, the RIAA tactics are like those you use against prisoners of war: browbeating, sleep-deprivation, maybe some extra screaming from the congressional staff. In the morning, a couple of new pages turn up and they hope you don't notice them."

Rabbett says the VoW groups should have walked away.

"But it really got out of hand, they thought it would be the CARP rate forever..

"And the make-up of the group was more or less chosen by the RIAA." The option that emerged, he thinks, is "overloaded, too complex, and leaves too much language for the RIAA to get out."

Nevertheless it's being heavily sold - both on the "Save Internet Radio" site owned by Kurt Hanson whose RAIN magazine has been the primary forum for these discussion, but which now apparently captive to the VoW cabal - and by webcasters who paid for legal representation, and who opted to venture into the RIAA negotiations.

96 Tears

"The 'core of grass roots broadcasters' will NOT go to the wall," Rusty Hodge of SomaFM wrote to us. "They (and all others) were already on the wall! They've got to come up with the fees by Oct 20th. But for any broadcaster with more than the minimum fees, the bill saves them money." (His full rebuttal is here).

Some of Hodge other points miss the mark.

"The '96%' number is completely inaccurate and is based on one person's posting to a private mailing list," he writes.

But it's a figure Hodge has used in the past, sources tell us. Hodges says most listeners who tune in to the most popular stations won't be affected, but doesn't directly dispute that most webcasters are small, grassroots stations with few listeners, although he insists most small 'casters broadcast silence or poor quality streams.

Hodges says we took his quote: "There are a lot of positive things in this bill ... creative ways for hobbyists" out of context.

Hurley, who resigned from the CARP list last week, takes issue with this:

"Hobbysts were never invited to the table," he told us. "What you have is a situation where the larger webcasters have what they want, and don't want us small guys to rock and boat and endanger their precious settlement."

"Now that your ass is saved, CARP is suddenly OK?"

If as widely expected, HR.5469 dies in the Senate today - only the breakaway stations endorse it, and it faces opposition from the powerful terrestrial lobby - it's hard to see where the community can rally next.

Rabbitt suggests bringing together all kinds of interests - and they must include the college radio stations, he says, alongside terrestrial stations which stream webcasts, aggregators and giants such as Real and Microsoft - with a neutral mediator and in an open room.

Shively thinks the legitimacy of the organizations needs to be established:

"Anything enshrined in legislation would have to establish whether SoundExchange is a legal entity and can collect retroactive liabilities," he said. The back payments that cripple 'casters date back to 1998, as requested by the RIAA.

He acknowledges that outside the US, most terrestrial radio stations are obliged to pay performance royalties, but it rarely exceeds the publishing (ie, songwriter) royalties. "There's no way a station needs to pay a multiple of songwriter royalties," he says. "And in some cases proposed it reaches double digits."

Webcasters who marched on Capitol Hill were encouraged that their representatives no longer automatically equated Net Radio with piracy. But there's evidently much work to do on the Hill, and educating the AFL-CIO, to boot.

As Shively told us:

"It's a Mom n'Pop business in the most fundamental sense of the word. The people who've made Congress take notice aren't the giant corporations, but the hundreds of thousands of faxes and emails from listeners. In one of Congress most busy periods, that's something." ®